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Employers warn of tough times as state declines to provide relief

Income levels have dropped drastically since the virus hit the country early in March

In Summary

• FKE boss says government declined their request for a Wage Relief Fund to keep employees. 

• CEO said the bill is skewed to favour employees at the expense of the employers.

FKE executive director Jacqueline Mugo.

Employers have warned their employees of tough times ahead after the government declined their request to establish a fund to keep them working in the wake of Covid 19 pandemic. 

Federation of Kenya Employers chief executive officer Jacqueline Mugo said they requested the government for relief but their request was declined. 

“The federation has engaged the government to see what kind of interventions could be extended to employers, including rebates to cushion the wage bill, such as wage relief, to keep employees and tax relief,” Mugo said. 

However, government informed the federation that putting in place a Wage Relief Fund would be a challenge, especially in terms of identifying the beneficiaries.

The unfolding left employers on their own to shoulder the burden of paying their workers despite the pandemic taking a heavy toll on them.

Mugo made the disclosures in her submission to the Senate Ad Hoc Committee on Covid-19 Situation in the country. 

The committee captured the concern in its sixth progressive report tabled in the Senate on Tuesday. 

Mugo, whose federation has a membership of 1, 900 enterprises representing about 2.3 million employees, said the employers are in distress due to the effects of the pandemic.

Income levels had dropped drastically since the virus that is ravaging the world hit the country early in March.

“Most employees have opted to give their employees unpaid leave. However, unpaid leave only affects basic pay, but medical and other fringe benefits still must be catered for by the employer. This may not be tenable in the long run,” she said. 

“Companies have also been making contributions on their own volition towards the Covid-19 Relief Fund, however, the government needs to exempt these contributions from tax." 

The CEO reiterated that a clear criterion needs to be identified on what essential and critical services entail, as some services complement them.

Holistic interventions need to be identified to protect enterprises for purposes of post-Covid-19 operations, she said.

The committee recommended that the Federation and the Central Organisation of Trade Unions (Cotu) should engage employers and employees ensure that where revenue losses have been realised, the parties may jointly review the terms of the employment contract to suit the prevailing circumstances of business.

Meanwhile, the federation has rejected the Pandemic Response and Management Bill that bars employers from sacking or slashing their worker’s salaries. 

The CEO said the bill is skewed to favour employees at the expense of the employers.

“The Bill is one-sided and favoured the employee without taking into consideration the circumstances under which the employer was operating during a pandemic,” she said. 

Edited by R.Wamochie